President Joe Biden to Issue First Veto to Protect Retirement Savings from Political Preference
President Joe Biden is set to issue his first veto as president after the Senate passed a resolution on Wednesday that would overturn a Biden administration rule allowing retirement plans to consider environmental, social, and governance factors in their investment decisions. The resolution, authored by GOP Sen. Mike Braun of Indiana, passed with a 50-46 vote, with Democratic Sens. Joe Manchin of West Virginia and Jon Tester of Montana voting with Republicans.[0]
The Biden administration has argued that the rule reflects the needs of successful investors and that there is an extensive body of evidence that environmental, social, and governance factors can have material impacts on certain markets, industries, and companies.[1] Democrats have also argued that the rule is not about ideology and will help investors.[2]
Meanwhile, Republicans have argued that the rule is “woke” policy that pushes a liberal agenda on Americans and will hurt retirees’ bottom lines.[2] Senate Majority Leader Chuck Schumer, D-N.Y., defended the Labor Department rule, saying “This isn’t about ideological preference — it’s about looking at the biggest picture possible for investors to minimize risk and maximize returns. Why shouldn’t you look at the risks posed by increasingly volatile climate incidents?”
The Employee Retirement Income Security Act (ERISA) mandates that investment managers only choose investments according to financial considerations, in order to shield retirement savings from their social and political biases.[3] The Trump Administration had adopted a rule to make clear that non-monetary considerations could not be used in selecting investments, but the Biden Administration eliminated that rule and adopted a rule that allows investment managers to consider non-monetary factors.[3]
Under the Congressional Review Act, Congress can pass a resolution with a simple majority vote to overturn any federal regulation, as long as they act promptly after the rule is established.[4] Typically, Republicans would need to locate an additional Democrat in order to acquire enough votes for approval.[4] With Sen. John Fetterman (D-Pa.) absent while receiving treatment for depression, Republican senators only need Manchin's backing to obtain the necessary votes.[4]
Critics of the regulation have claimed that it politicizes retirement plans and serves as a tool for the Biden administration to advance their liberal agenda to the public.[5] However, if the resolution is passed to President Joe Biden's desk, he has indicated that he will veto it in order to keep the DOL rule intact.
0. “Senate overturns federal rule on ESG investments, Biden vows to veto” CNBC, 1 Mar. 2023, https://www.cnbc.com/2023/03/01/esg-bill-senate-vote-on-overturning-federal-rule-on-esg-investments.html
1. “House passes resolution to overturn DOL ESG rule; Biden vows veto” Pensions & Investments, 28 Feb. 2023, https://www.pionline.com/esg/dol-esg-rule-resolution-passes-house-biden-vows-veto
2. “Senate votes to overturn Biden administration retirement investment rule Republicans decry as ‘woke'” CNN, 1 Mar. 2023, https://www.cnn.com/2023/03/01/politics/senate-vote-esg-rule/index.html
3. “Congress is set to rebuke Biden’s ESG agenda” FreedomWorks, 28 Feb. 2023, https://www.freedomworks.org/congress-is-set-to-rebuke-bidens-esg-agenda
4. “Republicans working to woo Democrats against Biden rules” E&E News, 28 Feb. 2023, https://www.eenews.net/articles/republicans-working-to-woo-democrats-against-biden-rules/
5. “McConnell Hits Biden 401(k) Rule as ‘Radical'” Newsmax, 28 Feb. 2023, https://www.newsmax.com/newsfront/mitchmcconnell-joebiden-401k/2023/02/28/id/1110506
